Reviewing Franchise Documents

When entering into a franchise, the franchisor will provide you with a number of documents, including a franchise agreement and disclosure document. Once issued to you, these documents govern the relationship between you (as the franchisee) and the franchisor. Our specialist franchise lawyers can review the franchise documents to ensure the terms are fair and reasonable.

Franchise documents set out all of the terms and conditions of the franchise including:

fees (incoming and outgoing);

the term (how long the franchise lasts);

ongoing obligations as a franchisee; and

under what conditions the franchise agreement can be terminated.

For a franchisee, it is important that you understand your rights and obligations under the franchise documents. LegalVision’s franchise team are highly experienced to ensure that your interests are protected. Our commercial leasing team also work closely with our franchise lawyers to negotiate and review any lease arrangements.

5 Things You Need to Know About Reviewing Franchise Documents

1Whether you’re considering signing up to a franchise agreement as a new franchisee, or you’re seeking to better understand the terms of a franchise that you’re currently involved with, a thorough review of your franchise documents is an obvious first step.

2The main document you’ll need to have reviewed is the franchise agreement. The franchise agreement is essentially a contract between the franchisor and the franchisee which sets out the terms of the franchise. This includes upfront and ongoing payments and ongoing obligations. The franchisor may require a personal guarantee, and a restraint of trade after you leave the franchise.

3The Franchising Code of Conduct also requires franchisors to provide prospective franchisees with a disclosure document. A disclosure document summarises the franchise agreement, and forms part of the pack of documents you should have reviewed by a lawyer.

4Franchising is a specialist area, so it’s important that you work with a lawyer with the necessary expertise. Issues in franchise agreements can be difficult for the untrained eye to detect.

5Finally, if you’re a prospective franchisee, make sure that you have all relevant documents (including any commercial lease agreement) reviewed before signing. Contractual agreements can be difficult to get out of, so take the time before signing to ensure a thorough review is completed.